Objectives and Game Plan

Become familiar with Intels financial statements and

better understand information on the Balance Sheet
Ratio Analysis

15.515 Fall 2003

Session 3

Walking Through Intels Annual Report

CEOs Letter
Financial Statements
Income Statement
Balance Sheet
SCF
SE
Notes
Auditors report
MD&A
15.515 Fall 2003
Session 3

ROE (Dupont) Analysis

NI = NI + (int. exp.) X
SE Assets
 

Operating
Performance
return on assets
return on
sales

NI
NI + (int. exp.)

Assets
SE

Capital
Structure

asset
turnover

NI + (int. exp.)
Sales
X Assets
Sales
15.515 Fall 2003
Session 3

ROE (Dupont) Analysis Intel 2002

NI
SE

3,117 + 84
(44,224 + 44,395)/2

0.087

3,117
3,117 + 84
X

0.072

Common
Equity
Leverage

ROA pre-interest

ROE

ROS pre-interest

1.243
Capital
Structure
Leverage

26,764
(44,224+44,395)/2

3,117 + 84
26,764
0.120

0.974

(44,224 + 44,395)/2
(35,468 + 35,830)/2

0.604
Asset
Turnover

15.515 Fall 2003

Session 3

Return on Sales vs. Asset Turnover

Sales
Assets

4
3.5

Each point represents an

industry

3
2.5
2

Semiconductors

1.5
1

NI + (int. exp.)
Sales
-3

-2.5

-2

-1.5

0.5
0
-1

-0.5

0.5

15.515 Fall 2003

Session 3

1.5
6

Return on Sales vs. Asset Turnover

Excluding negative ROAs and Financal Institutions
Sales
Each point represents an
Assets
industry

4
3.5
3
2.5
2
1.5

NI + (int. exp.)
Sales

1
0.5
0
0

0.05

0.1

0.15

0.2

0.25

0.3

0.35
15.515 Fall 2003
Session 3

0.4
7

Curves Showing Equal Return on Assets

Sales
Assets

4
3.5

Return on Assets
14%
8%
2%

3
2.5
2
1.5

NI + (int. exp.)
Sales

1
0.5

15.515 Fall 2003

Session 3

0.39

0.36

0.33

0.30

0.27

0.24

0.21

0.18

0.15

0.12

0.09

0.06

0.03

Intel 1998 - 2002

1998
1999
2000
2001
2002

ROE

ROA

0.270
0.260
0.301
0.035
0.087

0.202
0.195
0.230
0.029
0.072

Common Capital
Equity Structure
Leverage Leverage
0.993
0.994
0.996
0.955
0.974

1.344
1.339
1.312
1.262
1.243

ROS

Sales
over
Assets

0.232
0.250
0.314
0.051
0.120

0.871
0.780
0.735
0.575
0.604

Data Source: Intel Corporation

15.515 Fall 2003

Session 3

Comparative ROEs

ROE

ROA

Common
Equity
Leverage

2001 MICROSOFT

0.166

0.132

1.000

1.257

0.290

0.454

2001 STARBUCKS CORP

2001 IHOP CORP

0.144
0.141

0.108
0.102

1.000
0.656

1.325
2.103

0.068
0.189

1.584
0.539

2001 LILLY (ELI) & CO

0.423

0.192

0.929

2.367

0.259

0.742

2001 MERCK & CO

0.472

0.185

0.940

2.717

0.162

1.137

2001 PFIZER INC

0.453

0.223

0.960

2.114

0.253

0.883

2001 TIFFANY & CO

0.177

0.121

0.897

1.630

0.120

1.005

2001 LIMITED BRANDS

2001 TJX COMPANIES

0.205
0.391

0.126
0.166

0.939
0.925

1.740
2.551

0.059
0.051

2.126
3.281

2001 99 CENTS ONLY

0.169

0.154

0.998

1.098

0.084

1.837

CONAME

Capital
Structure
Leverage

ROS

Sales over
Assets

15.515 Fall 2003

Session 3

10

-10%
0%

Session 3

15.515 Fall 2003

I 02

II 01

III 00

IV 99

I 99

II 98

III 97

IV 96

I 96

II 95

III 94

IV 93

I 93

II 92

40%

III 91

II 92

20%

III 90

IV 89

I 89

Gross Profit Percentage

60%

50%

Compaq

30%

Dell

10%

-20%

-30%
11

Gross Profit Percentage

60%

Apple

50%

Compaq

40%
30%

Dell

20%

I 02

II 01

III 00

IV 99

I 99

II 98

III 97

IV 96

I 96

II 95

III 94

IV 93

I 93

II 92

III 91

II 92

IV 89

-10%

I 89

0%

III 90

10%

-20%
-30%
15.515 Fall 2003
Session 3

12